A member of the Retail Life Insurance Advice working group which gave rise to the Trowbridge Report has claimed its mandate was changed within its last weeks from one intended to deliver an industry-wide response to being simply a report by its chairman, John Trowbridge.
Furthermore, the working group member has claimed that this occurred despite the objections of the Association of Financial Advisers (AFA) representatives.
Centrepoint Alliance managing director, John de Zwart has written to advisers within his group pointing to what he described as the change in mandate which gave rise to the Trowbridge outcome. Money Management has obtained a copy of de Zwart’s communication.
He acknowledged that he participated in the working group as a representative of the Association of Financial Advisers (AFA) representing advisers and independent licensees and noted that other working group members represented the Financial Services Council (FSC) and the life insurance manufacturers with John Trowbridge as an independent chair.
“The original mandate for the working group was to develop an industry wide response to ASIC’s Life Insurance Report issued in October 2014, which identified high levels of poor advice,” de Zwart’s letter to advisers said.
“The working group sought submissions from stakeholder groups and approximately 130 were submitted in January and February. The quality of independent adviser submissions was excellent, reflecting positively on our sector and also identifying the often misunderstood and hidden behaviours of the institutions in encouraging replacement business.”
“The working group’s mandate changed in the week prior to the Final Report’s release and became the Report of the Chair, representing his views and not a consensus view. Whilst the AFA representatives objected to this change in mandate, the FSC supported the change,” de Zwart said.
His letter to members went on to say, “The Report now reflects the views of John Trowbridge and has many similarities in regards to adviser remuneration with the FSC’s Life Insurance Sub Committee recommendations”.
“While I am personally disappointed with the process and some of the final recommendations, Centrepoint Alliance and the AFA will continue to lobby hard for a more level playing field for independent advisers and licensees,” de Zwart said. “There is going to be significant noise over the coming months, possibly years, as the recommendations are further debated and worked into regulations or legislation, systems and products. “
He then went on to recommend that advisers focus on growing and improving the sustainability of their businesses, raise their concerns with their insurers and ask to see their insurer’s submissions “many of which were private to John Trowbridge and the FSC secretariat”.
“If they decline, you should question whether they support independent advisers,” de Zwart said.
He suggested that advisers also raise their concerns with politicians, “particularly the impact this will have on small business and quality of advice. Few understand the cheapest insurance for healthy individuals is through an adviser — not through industry funds or direct insurers”.
